Issues to consider when investing in Zimbabwe
As a new investor to Zimbabwe, one might not know what issues to consider and where to find information regarding those issues. This article seeks to highlight some important issues which a new investor must consider and where to find information relating to the issues.
- Starting point
The first issue to consider is actually where to start. When one is planning on investing in Zimbabwe, the best place to start is to look at the Zimbabwe Investment Authority (“ZIA”) website (www.investzim.com). ZIA is “the country’s investment promotion body set up to promote and facilitate both foreign direct investment and local investment” and will assist in identifying the pertinent considerations any investor should have in mind when investing in Zimbabwe as well as the various certification requirements.
- Currency and repatriation of funds
Zimbabwe currently has a multi- currency regime in terms of which the Zimbabwean Bond Dollar, United States Dollar, South African Rand, Botswana Pula, Pound Sterling, Euro, Australian Dollar, Chinese Yuan (renminbi), Indian Rupee, and Japanese Yen would all be accepted as legal tender within the country. The most common currency, however, is the United States Dollar, to which the Zimbabwean Bond Dollar is pegged at a rate of 1:1. The Zimbabwean Bond Dollar, however, may only be used in Zimbabwe and was introduced in Zimbabwe due to foreign currency shortages. The same foreign currency shortages have resulted in delays in remitting funds offshore. Funds are remitted offshore in accordance with a priority list published by the RBZ. You may access the priority list here.
As a foreign investor to Zimbabwe, there are a number of taxes to consider. The list of the most common taxes which may affect investors are as follows:
- Non- resident shareholders’ tax;
- Non- resident tax on fees;
- Non- resident tax on royalties; and
- Non- resident tax on remittances.
- Customs and excise duty;
- Value Added Tax (“VAT”) on imported goods and services.
The existence of a double taxation agreement between Zimbabwe and the country which the foreign investor is from may provide some tax relief. A list of countries with double taxation agreements with Zimbabwe is available in the Manokore Attorneys Doing Business Guide which may be accessed here. A commercial law firm in Zimbabwe, or accountants, may assist with project specific advice in this regard.
- Exchange Control
Zimbabwe has strict exchange control regulations which place requirements on residents intending to incur any obligations offshore to obtain approval from the exchange control authorities prior to doing so. Furthermore, the exchange control laws in Zimbabwe place an obligation on a non-resident trading in Zimbabwe to receive payment in Zimbabwe in certain circumstances. A commercial law firm in Zimbabwe may assist in submitting exchange control application and advising on how to comply with exchange control laws.
Whilst there are many other considerations, a commercial law firm in Zimbabwe may assist in by providing project specific advice.